Is Google Hurting Free Market Competition?

Senators Herb Kohl and Mike Lee have put together a letter calling for an FTC investigation of Google, with an emphasis on the company’s search results.

Note that the letter refers to Bing as “a partnership of Microsoft and Yahoo”. And that this is the only competition Google has. I’m not sure this is an accurate portrayal of the search industry. Bing is not a partnership of Microsoft and Yahoo. It’s Microsoft’s search engine. They are separate. Sure, they do have a partnership, and Bing powers the back-end of Yahoo, but they are still two different search engines. Granted, they are sharing an advertising platform now. Furthermore, there are other search engines out there, though their market share isn’t nearly as great.

Newer kinds of search engines have popped up in recent memory. Blekko and DuckDuckGo spring immediately to mind. Just because people aren’t using them as much as Google, doesn’t mean they aren’t free to compete. They aren’t being used nearly as much as Bing either. Bing has proven that marketing a search engine and making strategic partnerships can go a long way in gaining market share in the search industry.

The reality of the Internet and the search industry is much broader than competition among search engines. The fact is that people are obtaining information in a lot more ways now. They’re relying on search less for some of that. They’re turning to social media and different apps. A lot of iPhone users may be turning to Siri now. That’s just an example. Smartphones and tablets have opened up the world to a whole new world of apps for consuming information online. That itself could be just as big of an obstacle for Bing as anything.

For that matter, it could be a benefit for Bing if they play their cards right. If people have to rely on the traditional search engine less for some types of information consumption, perhaps there are opportunities for Microsoft to innovate more in the app world. I do believe the direction they’re going with Xbox and Kinect can have some pretty big ramifications. I wonder what a Bing-infused Xbox mobile device could accomplish for their share of the search market. Getting Xbox Live features on mobile devices is a start, but what about something more like what Sony is doing with the Playstation Vita, only Xbox style, taking advantage of the new Xbox platform.

A representative for the FairSearch Coalition sent us these comments on the letter from Rick Rule, head of the Department of Justice’s Antitrust Division from 1985-1989, a partner at Cadwalader, Wickersham & Taft LLP, and outside counsel to Microsoft:

Senator Lee is right to call for careful scrutiny of Google, given the numerous allegations of antitrust violations by the company. The antitrust laws of this country prohibit companies like Google that dominate important parts of our economy from using their market power to destroy competition and to deny consumers of choice. Decisions from conservative courts make clear that the antitrust laws apply just as much to the new economy as to the old. If a company like Google is allowed to flout the rule of law, then free-market competition will suffer.

Senator Lee’s letter to the FTC shows that the Senator understands that promoting sound antitrust law enforcement is an important bulwark against the inevitable calls for regulation. Senator Lee’s letter is in line with the views of conservative judges and free-market heroes, like Judge Bork and Judge Posner.

I too am a conservative who believes in the supremacy of free markets. I worked for President Reagan as the head of the Justice Department’s antitrust division. We understood then, as Senator Lee understands today, that in order for free-market competition to work, consumers and producers must be able to respond to the market’s “invisible hand” free from artificial restraints imposed by government, by cartels, or by monopolists like Google. The troubling allegations that Google uses its market power to impose such restraints are too numerous to ignore. As Senator Lee’s letter demonstrates, conservative principles demand that Google be held accountable to the rule of law.

They also sent us these comments from Mark Corallo, former Press Secretary and then Public Affairs Director for the U.S. Department of Justice under Attorney General John Ashcroft (2002-2005). He’s currently a spokesman for FairSearch:

Senators Herb Kohl (D-WI) and Mike Lee (R-UT) sent a letter to Federal Trade Commission (FTC) Chairman Jonathan Leibowitz requesting that the FTC conduct an investigation into Google’s business practices. They should be applauded. The rule of law is non-partisan. And that is all they are requesting of the FTC – make sure that Google is following the law.

Considering the grilling they gave Google CEO Eric Schmidt at Senate hearing back in September, the news is not that these two Senators have concerns relating to Google’s leveraging its market dominance in anti-competitive and potentially illegal ways. The news is that the Chairman and Ranking Member of the Antitrust Subcommittee put it in writing and asked for action. When two senators not only agree on an issue but are willing to do something about it, the seismic tremors can be felt from the halls of the FTC right on up to Google’s executive suites. And that’s nothing compared to the shockwave that Google’s multimillion dollar lobbying team is feeling from all sides – after all, they’re paid to cut off these types of legitimate inquiries.